McMahon, Murphy clash over taxes

Brian Lockhart

Updated 11:31 pm, Thursday, October 4, 2012

In the battle for the U.S. Senate in a state with a high cost of living like Connecticut, the phrase "middle-class tax cuts" is surely music to voters' ears.

Republican Linda McMahon thinks so. The former wrestling entertainment executive now running for the Senate has made the cuts the central theme of her much touted, 10-page economic proposal.

Essentially, McMahon proposes to keep all of the Bush-era tax cuts and expand them for a portion of the middle class.

Chris Murphy, a 5th District congressman and her Democratic opponent, says McMahon can't achieve all of her tax-cut goals and slash federal spending without ultimately hammering the middle class.

Murphy supports President Barack Obama's intention to keep the Bush-era tax cuts in place for those with incomes below $250,000.

"My general focus is on preserving and expanding middle-class tax cuts," Murphy said, while not offering additional specifics. "People I talk to want by and large a mix of serious, common-sense spending reductions and (asking) the very wealthy to pay their share."

He also wants to end "some of the most egregious and unnecessary (corporate) loopholes, credits and deductions" to allow a reduction in overall business tax rates and make them more competitive for the global economy.

During her first Senate bid in 2010, McMahon and Democrat Richard Blumenthal fought about whether to allow tax cuts enacted under Republican President George W. Bush to expire for millionaires, themselves included.

With the Bush tax cuts now scheduled to expire at the end of 2012, McMahon early on in the current Senate race sought to change the terms of the debate. Instead of touting her continued support for an across-the-board extension, she started calling for a new middle-class tax cut, even though Democrats and Republicans in Washington are in agreement the Bush-era cuts should be extended for that group anyway.

When Murphy has said her plan reduces her own taxes, the McMahon campaign has cried foul.

"Her tax rate under this plan would be exactly as it is today," spokesman Todd Abrajano said.

It is a fine point not spelled out in the campaign's advertising of the tax cuts; McMahon would preserve the rates under the Bush tax cuts -- including those for high-income earners like herself -- with one modification for the middle class.

McMahon's plan, as detailed on her website, would maintain the current 10 percent, 15 percent, 28 percent, 33 percent and 35 percent brackets, but eliminate the 25 percent bracket and put more single and joint filers in the 15 percent bracket.

"We have misidentified high-income earners as `job creators,' " Deak said. "The true job creators in the American economy are consumers and people who buy goods and services."

Lanza agreed, adding, "wealthy individuals will save it, stick it into a bank account, under a mattress, some place. Middle-class taxpayers are going to spend it."

Murphy's campaign further argues that McMahon, who says she is running as an independent-minded Republican willing to compromise, will never do so on tax increases for the wealthy because she signed the "protection pledge" circulated by Grover Norquist's Americans for Tax Reform in 2010. Abrajano said the agreement does not apply to the 2012 election cycle.

"She's not comfortable raising taxes on anybody right now with the economy the way it is, but would be open to the top bracket at some point in the near future as long as the revenue derived from the increase goes to paying down the debt and deficit," Abrajano said.

It is not clear how McMahon would pay for the extension of the Bush-era tax cuts, additional middle-class tax relief, plus cuts in capital gains taxes and estate and gift taxes. Her plan promises to "end reckless Washington spending" by about $1.7 trillion over eight years.

"All this stuff with Linda McMahon and others who are running, it's just fluff until you identify how in fact it's going to be paid for," Deak said.

For example, while she wants an annual 1 percent reduction in federal spending, McMahon has pledged to protect Social Security, Medicare, defense spending, food stamps and other "safety net" entitlements.

`HARD CHOICES'

Murphy's campaign has charged his opponent would eliminate a variety of tax deductions and further burden the middle class. McMahon's plan only lists "corporate tax credits" along with business subsidies and earmarks as targets for elimination.

"Chris Murphy is doing nothing but misrepresenting Linda's position," Abrajano said. "Nowhere in her plan does she talk about eliminating any sort of tax credits or deductions on the personal income side."

But Lanza said it is realistic to assume some of those programs might have to be on the chopping block to fulfill McMahon's vision because Congress will never agree to eliminate all business aid and earmarks.

"Even allowing all of the Bush tax cuts to expire won't balance next year's budget," Lanza said. "No one wants to make these hard choices and put them down in black and white because you'll be a target of criticism for the other side. ... It's not Murphy and McMahon. It's what politicians do."

Before even considering the merits of McMahon's proposal, voters should understand that, if elected, McMahon would be a freshman senator and would be in no position to single-handedly rewrite the federal tax code, particularly if Democrats still control the chamber, one expert noted.

"Candidates for political office should inform voters of what they hope to accomplish in office, but voters should judge those statements as goals, not as promises," said F. Christopher Arterton, of New Haven, founding dean of the graduate school of political management at The George Washington University. "McMahon should not suggest that her idea of doubling down on cutting taxes for the middle class (is) a promise she will deliver."